Components of a Music Licensing Agreement

When a musician creates an original song, they own the copyright to the song, which comes with a number of different rights. These rights are sometimes referred to as a "bundle of sticks," because each right has value and can be individually licensed or sold as the artist chooses.

For example, a musician could license their song to a film producer for the use of the song in a film, and still maintain other rights to the song for the musician’s own album sales and live performances. The number of rights sold and the number of rights maintained by the musician all depends on the contents of the music licensing agreement.

Thus, when entering into a music licensing agreement, it is important for a musician to consider all the different components that will affect their rights to their song and how those rights are valued. This article discusses some of the most common components to a music licensing agreement.

1) Specific Uses Permitted

First, a song can be licensed for a single purpose, a number of purposes, or for all purposes. The more rights the artist licenses, the greater the value of the licensing agreement. However, the artist may lose some of his or her own rights to the song depending on other conditions of the agreement.

Single Purpose: In the example above, the song was licensed to the film producer for the sole purpose of the use of the song in a film. Thus, the film producer was not entitled to use the song for any purpose besides playing the song in the film.

Number of Purposes: However, the film producer may wish to also purchase rights to use the song for other purposes, like commercials for the film, soundtrack sales, and film sequels. These additional rights would likely increase the value of the licensing agreement.

All Purposes: Alternatively, the film producer may wish to purchase the song entirely for his or her own exclusive use. Here, the artist would sell the entire "bundle of sticks" and would no longer have any rights to use the song for any purposes.

2) Exclusivity

Another important factor to consider when licensing music is exclusivity. This component will largely determine what rights to the song the musician will maintain.

Here, the contracting parties decide whether the song may continue to be used or sold for other purposes outside the licensing agreement, and for what purposes.

For example, the film producer may wish to purchase exclusive rights that prevent the song from being licensed for use in other films. However, the musician could grant this request, and still bargain to maintain rights to use the song for other non-film related purposes.

Thus, a licensing agreement can be exclusive to some purposes but not for others, and the greater the exclusivity, the greater the value of the licensing agreement.

3) Duration

One should consider how long the license agreement will last. The duration can be fixed by a set period of time or be contingent on other events.

In the film example, the producer would likely want rights to use the song in the film indefinitely. However, if the artist were instead licensing a song to an online music- streaming site, the artist may choose to only allow the song to be available for stream for a set period of time.

4) Geographic Location

In some instances, a music licensing agreement can specify a geographic location for which the agreement is applicable. For example, a musician could license their song for its use in a commercial that will be broadcast only in China, and bargain to maintain rights to license the song for other uses in the United States.

5) Royalties

A musician can contract to maintain rights to royalties from profits earned by the party licensing the song. For example, the musician could contract with the film producer to receive a portion of profits earned from the film’s soundtrack sales.

Royalty agreements may be used in addition to, or in replacement of, other methods of payment for the license.

6) Song Augmentation

A musician may decide whether or not a licensed song may be augmented in its use. Augmentation can include clipping the song, or more extensive remixing. Here, an artist may prefer to maintain the integrity of the song in its original form, or may be willing to accommodate the needs of the licensor.

7) Assignment

The contracting parties determine whether the party licensing the song is allowed to sell their license. For example, this would determine whether the film producer could sell their right to use the song to another film producer to use in a different film instead.

Contacting an Attorney

While each of these components are commonly addressed in a music licensing agreement, there are countless other factors that may arise depending on the unique needs of the musician and the party licensing the song.

If you are considering entering into an agreement to license your music, it can be extremely helpful to consult an experienced business attorney. Hiring an attorney will ensure you understand exactly how the agreement will affect your rights to your music and will maximize the value of your contract.

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